84 Month Auto Loans: Bad For The Industry? For The Consumer?


#41

I’m currently working on a “reverse mortgage” concept for my truck. I’m going to make out HUGE on this.


#42

isnt that what a title loan is?


#43

Wow, I was just screwing around. Didn’t even know that existed…but not surprised I guess.


#44

I think its pretty silly. If you need to take 7 years to pay off a car, you probably should be taking the bus.

Problem is a lot of people won’t think twice about it, and when they go to sell the car in 5 years they’ll be upside down and because they have no money they just roll that negative equity into the next car they can’t afford! Dream come true for the banks.


#45

Career job haha :clap:


#46

With the current price of new cars vs average income in the US it makes it easy to see why loans are getting extended…


#47

In the 90’s a couple banks started offering 60 month auto loans and people in the business couldn’t wrap their heads around it. Some day 84 months will be standard and we’ll have trouble wrapping our heads around a 108 month loan.


#48

If you think and 84 month auto loan is bad in regards to depreciation over the time of the loan, just imagine a 180 month term on a 300k depreciating RV. I used to see people 100k upside down halfway through their loan. They would come in shopping, looking to buy something smaller, in hopes of lowering their payment because the thrill was over.

They could never grasp the concept that what they owe is still there and it doesn’t go away.


#49

a fool on a long term will lose their ass. but if you’re mildly smart you’ll realize that just because you take a long term doesn’t mean you have to live it out or only make the min. payment.

I’ll always take the longest term that will give me the lowest rate and as long as the stock market is beating my rate I’ll always make the min payment possible.

I currently have two financed cars and some student loans that I could pay off in cash today, but I won’t since I prefer making more money.


#50

I think a big problem with people my age is that a car payment is just part of life. There’s no concept of completing the loan term and actually OWNING that piece of equipment. By the time most kids are even half way through their term (and have paid off 1/4 of what they owe) they’re already shopping for their next car, and usually getting into it before they are truly financially able to. At that point it doesn’t matter if it’s a 12 month, 36 month, or 84 month loan. It’s just “a car payment”.


#51

I did a 6-year on my 2 year old Tahoe. Rate is low, and I’ll pay it off in 4, but it was nice to have the lower payment just in case. I do agree that loans for autos/homes are given out WAY too plentiful and easily for people who don’t have the means or understanding to fulfill them.


#52

Agreed it all depends on rate, I would also agree that 1/2 of my customers go at least 72-75 months and 1/4 go 84 months. When I was selling in atlanta 120mo financing was the big thing, and you could also have 4 people on an auto loan “note”. So 4 guys would split the payment and usage up through out the week lol. Status was key in ATL, never mind the $300/mo studio apt when you have BRAND NEW 650i for 2 days a week.

Also new vs. used is a preference and contingent on every deal. Sometimes there is huge rebates/low rates on new, and sometimes you can find a killer deal on a like new pre-owned car. But again if you go used most likely you will need to come up with an extra $2-4k for a decent extended warranty so that will certainly offset your savings.


#53

unless you can and are willing to do the work yourself…


#54

I think we’re starting to see the answer to this question…

Americans with lower credit scores are falling behind on auto payments at an alarming pace.The rate of seriously delinquent subprime car loans soared above 5% in February, according to Fitch Ratings. That’s worse than during the Great Recession and the highest level since 1996.


#55

Hmm think I can start buying up subprime insurance on these loans?


#56

Just saw the title to this thread and LOL’d to myself. 84 month loans!? What a great idea! Personally they should be 120-144 month loans. Bahahaha.


#57

This.


#58

My biggest problem with these long term loans with so little down is they guarantee someone will be upside down on the loan for many years. Owing more than what you’re financing, no matter what the thing is (car, boat, house etc) puts you at so much more risk financially. If your situation changes you always want to be able to sell your financed item easily and walk away with the loan paid off in full. The problem is much worse with new vehicle purchases since they take a big depreciation hit the minute they drive off the lot and go from being “new” to “used”.


#59

5 years at 1.7% and even then I still felt bad about it. Cheap money, though…


#60

It will be interesting long term to see what happens to the auto market with most ads being pushed towards a lease and not buy.